Accounting 1
A form for recording transactions in chronological order is called a
Journal
How often should businesses record journal transactions?
Daily
What is double entry accounting?
The recording of debit and credit parts of a transaction.
A business paper from which information is obtained for a journal entry is called
a Source Document
A business form ordering a bank to pay cash from a bank account is called
a Check
A form describing the goods or services sold, the quantity, the price, and the terms of the sale is called an
Invoice
A business form giving written acknowledgement for cash received is called a
Receipt
A form on which a brief message is written to describe a transaction is called a
Memorandum (Memo)
When cash is used to pre-pay insurance, which account is listed on the first line of the journal entry?
Prepaid Insurance
When supplies are bought on account, which account is listed on the first line of the journal entry?
Supplies
When supplies are bought on account, which account is listed on the second line of the journal entry?
Accounts Payable
When cash is paid on account, which account is listed on the second line of the entry?
Cash
When cash is received from sales, which account is listed on the first line of the entry?
Cash
When cash is received from sales, which account is listed on the second line of the journal entry?
Sales
When services are sold on account, which account is listed on the second line of the entry?
Sales
When cash is paid for any reason, what abbreviation is used for the source document?
C (for check)
When cash is received on account, what abbreviation is used for the source document?
R (for receipt)
In what order are transactions recorded in a journal?
By date
Why are source documents important?
Source documents are one way to verify the accuracy of a specific journal entry.
On which line of a journal entry do you indent the account title?
The second line, the credit line
List the four parts of a journal entry
Date, Debit, Credit, Source Document
Journal entries should be recorded using
ink
When cash is paid to an owner for a withdrawal of equity, what account is listed on the first line of the journal entry?
Owner, drawing
When cash is paid for an equipment rental, what account is listed on the first line of the journal entry?
Rental Expense
When cash is received from an owner as an investment in the company, what account is listed on the second line of the journal entry?
Owner, capital